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Thursday, 1 July 2010

Doosan Heavy Industries and Construction announced Thursday that it has signed a 4.7 trillion won ($4 billion) deal with the Korea Electric Power Corporation (KEPCO) to provide a nuclear reactor to the United Arab Emirates (UAE).

A Korean consortium, led by the KEPCO, won the deal worth $20 billion last December, and the nation's No. 1 power equipment maker will design, build and operate four 1,400-megawatt reactors by 2020 in the UAE.

"We will contribute to the export of more Korean-built reactors after completing the first global project in cooperation with KEPCO," said Park Gee-won, the president and CEO of the company.

"It's in negotiation," said Abdelrahman al Saleh director general of Dubai's Department of Finance, when asked on a recent report by a French daily saying DAE may be forced to renegotiate some 220 aircraft orders due to the emirate's financial woes. [ID:nLDE65R0M1]

Kuwait shares fell to the lowest in 16 months, leading Gulf markets lower, on concern the global recovery will falter as China’s growth slowed and Moody’s Investors Service signaled it may cut Spain’s credit rating.

The Kuwait SE Price Index retreated 1.7 percent to 6,431.7 at the close in Kuwait City, the lowest level since March 2009, taking this week’s decline to 2.9 percent. Gulf Cable and Electrical Industries Co., a maker of electrical equipment, led the drop and Agility slumped 7.9 percent. Bahrain’s gauge lost 1.2 percent to 1,379.98, the lowest since at least July 2004, when Bloomberg started tracking the index. Oil fell to the lowest in two weeks.

Stocks from the Gulf “are taking cues from the global economic outlook, which seems to be in somewhat of a flux,” said Saud Masud, a Dubai-based analyst at UBS AG.

The cloud over the financial future of Dubai after the Dubai World debt crisis is the overriding risk to watch in the United Arab Emirates this year.

Added to that are some lingering worries about an escalation of Iran's nuclear dispute with Western powers, a long-running territorial row with Iran and Islamist extremism.

DUBAI DEBT AND FINANCIAL WOES

The United Arab Emirates' economy is expected to grow by 2.5 percent this year, the slowest pace in the Gulf Arab region, as large debts burdening state-linked firms in Dubai weigh on a recovery following the Dubai World debt crisis.

A private equity fund of Dubai's Shuaa Capital agreed to sell about 22 percent of its stake in Abu Dhabi-based Rotana Hotel Managment to an existing Rotana shareholder, the company said in a statement on Thursday.

The transaction is due to be completed within a few weeks, following approval from the Abu Dhabi Department of Economic Development, the company said. It did not disclose the deal value in the statement.

Shuaa Partners Fund I, a debt and equity fund of private equity arm Shuaa Partners made the investment in Rotana in 2006. The company did not provide any financial estimates for how much the sale of the stake will bring to the company.

The need to supply finance for Saudi Arabia’s ambitious infrastructure programme is expected to help deepen the country’s bond market, bankers says.

But the lack of sovereign bond issuance could act as a setback in creating a yield curve to guide corporate issuers in pricing their own bond sales.

“Given the amount of infrastructure spending, it’s inevitable that there will be more project bonds being issued,” Rizwan Shaikh, the director of Citigroup Global Markets, said at a Saudi Arabia investment conference in Dubai yesterday.

Grant Thornton, the international accounting firm, is trying to broker a peace deal to end one of the Middle East’s longest-running business feuds.

The firm has approached the al Gosaibi family of Saudi Arabia with a plan to end the hostilities between it and Maan al Sanea, the Kuwaiti-born entrepreneur who built the Saad Group, sources say.

Grant Thornton has also put a proposal to the creditors of the two businesses, which are owed as much as US$20 billion (Dh73.45bn) as a result of the financial problems at the two Saudi companies. The plan was first suggested earlier this year and heads of agreement drawn up for the two sides, but they have not yet been signed.

A Kuwaiti minister warned yesterday that the global economic crisis is not yet over and may even escalate further due to several factors, primarily the unstable economies of some European nations. In a statement delivered at the 29th session of Arab social affairs and labor ministers on behalf of Kuwait's Minister of Social Affairs and Labor Dr. Mohammad Al-Afasi, his Saudi counterpart Dr. Yousef Al-Othaimeen said that the international financial crisis had "persisted," and despite the prevailingoptimism that it might end in the near future, the possibility that it could worsen also remains, "since there have been no signs of a full-scale recovery of the international economy.

He continued on an ominous note, "In fact, there are some dangerous indications as a result of the collapse of the Greek economy and the potential disintegration of the economies of a number of European Union member countries." The financial crisis has caused widespread and unprecedented unemployment levels and an economic recession that might yet develop into depression, thus threatening to obstruct the regional states' development plans, warned Al-Afasi, in the speech delivered by Al-Othaimeen. The Kuwaiti official was unable to attend yesterday's session due to his participation in a crucial parliamentary debate in Kuwait.

The global meltdown has also negatively affected regional nations' growth and reduced prosperity levels, thus boosting the spread of poverty and unemployment, limiting healthcare services and causing deterioration in education and public utilities, the Kuwaiti minister stated.

The map of the world's main energy suppliers is about to change as Iraq's oil output quadruples over the next 10 years according to new forecasts. Iraq will eventually displace Saudi Arabia as the world's biggest exporter, experts predict, giving Baghdad crucial influence over the future price of oil.

The rush to exploit Iraq's "super-giant" oilfields, of which it has the largest concentration in the world, has gathered impetus with unexpected speed in the wake of BP's disaster in the Gulf of Mexico which has raised fears over deep-sea drilling. Iraq's oil has the advantage of being both onshore and cheap to develop.

The intensifying political isolation of Iran, and the latest moves by the UN Security Council to target the Islamic regime with increasingly tough sanctions in a bid to prevent its development of nuclear weapons is a second key factor influencing Iraqi production. Iran may have unexploited reserves, but its oil output is expected to fall significantly as its old oilfields are depleted and not replaced.

Islamic bonds returned more than Shariah-compliant stocks for the second straight quarter, helped by Dubai World’s May accord with creditors to restructure $23.5 billion of loans.

Fixed-income securities from the Persian Gulf, “in particular Dubai, will extend gains in the next three to six months,” said Ahmad Alanani, the London-based associate director for the Middle East and North Africa at Exotix Ltd., an investment bank specializing in illiquid bonds, loans, equities, structured finance, capital raising and asset management. “As Dubai cleans house, the region will continue to attract investors.”

The HSBC/NASDAQ Dubai US Dollar Sukuk Index, made up of Islamic bonds from Indonesia to Saudi Arabia, rose 0.8 percent in the three months ended June 30 compared with a 12 percent drop in the Dow Jones Islamic Market World Index as global equities tumbled, according to data compiled by Bloomberg. The HSBC index gained 5 percent in the first quarter compared with a 2.4 percent advance in the stock index, the data show.

Abu Dhabi National Energy Co., known as TAQA, agreed to buy a 40 percent stake in Sohar Aluminium Co. of Oman from Abu Dhabi Water and Electricity Authority for $400 million.

“Our track record in power generation means that we are well placed to add value to such an energy-intensive business as aluminum,” TAQA’s Chief Executive Officer Abdulla Saif al- Nuaimi said in a statement today. “This is a high-quality operation and is not only expected to increase TAQA’s cash flow, but provides entry for us into the Sultanate of Oman.”

Abu Dhabi Water owns 51.05 percent of TAQA, which has oil and gas production assets and utilities in the Middle East, North America, the North Sea and India. Its TAQA North unit bought a portion of Suncor Energy Inc.’s assets in west central Alberta in Canada for C$285 million, it said on June 23.

Dubai shares declined, leading the drop in the Gulf, after a slump in U.S. consumer confidence fueled concern about the global economic recovery. Shuaa Capital PSC fell as the head of its brokerage division resigned.

The DFM General Index lost 1.4 percent to 1,461.8, the lowest since February 2009. The gauge fell 21 percent this quarter, the most since the fourth quarter of 2008. Investment bank Shuaa slid the most in a week and Emirates NBD PJSC dropped. The Bloomberg GCC 200 Index retreated 0.8 percent and in North Africa, Egypt’s gauge declined a seventh day. Crude has fallen 9.5 percent this quarter, as of 5:24 p.m. in Dubai.

Declines are “in line with the global backdrop,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “Focus is returning to the euro zone, disappointing data in the U.S. and weaker oil.”